Finance/Dollarization and Corruption

[Course]

THE IMPACT OF THE LAUNDERING OF THE MONEY IN LATIN AMERICA

A.Dollar-denominated accounts in Latin America during the 1990s

The agents of the Latin America domestic currency allocate some part of the saving between the dollar and the domestic currency denominated accounts. Though the relative movement between the accounts is discussed by the deflation expectations of the domestic currency. In the Latin America the depositors though faces some uncertainty and also the friction of the economics in the decision of their portfolio.

During the past couple of decades the presence of the dollars has been increased in the most countries of the Latin America. In the year 1970, this process have been started that was fueled by the reforms of the financial institutions, as exchange control of foreign and the as capital that was lifted by the dollars of the United States of America in order to the gradual change for the replacement of the local currencies. It was done in order to avoid the possible losses that are caused by the macroeconomic instabilities. In the Latin America the dollar has been started to use as a unit of the account mostly in the sector of the real estate in which the prices that have been increased along with the relative changes in the overall inflation in the economy. Finally the dollar has been changed as a medium of the exchange.

There is also existence of the crisis of the past banking and also the current degree for the dollarization that is the best predictors of the crisis in the future. Specifically, if there is the occurrence of the crisis, there will be many dollars that will be denominated in the system of the banking that will also increase the probability of the crisis in the future. This will increase the exchange rate due to which it will reflects the increased rate for which the exposure would being connected with the accounts of dollars in a weak system of banking.

There is also the existence of the volume in the dollar denominated accounts and also the positive correlation between the macroeconomics aggregates therefore due to the fact the dollar denominated accounts would have directly effects the whole volatility of the economy.

The findings have shown that the regulations of the money laundering has a direct impact in the reduction in the laundering of the money and also the feeder activities and their extent of the controlling for the characteristics of the other country, potential endogeneity and the legal enforcement.

There is also a role of the prelimary findings for the different aspects of the laundering of the money that includes the disclosure of the financial institutions and also certain other powers that makes the enforcement easier. There is a volatile and the risky combination of the American companies for the different regions of the word that presents Latin America for the corruption done publicly and also the booming growth specifically in the industries when the companies of the foreign needs to rely completely on the ...